There’s no shortage of startups. To convince investors, you need more than exchangeable technologies and precisely calculated business models. All entrepreneurs are pitching a future that they believe in.
We all know what purpose is. That thing that gets you up in the morning instead of keeping you from falling asleep at night. But how to craft and tell it so your partners, your investors and your customers, will be on board with you to achieve that larger-than-you idea?
Why is purpose narrative so important? Because we know when it comes to doing good to the world, there are, and there should be, more than one approach.
There are a number of popular models for responsible business. They all come down to one common factor — to make profits with purpose. A purpose that implies an underlying positive impact to humanity, ranging from as small as improved financial conditions for all employees within the organization, or as big as achieving sustainability of essential resources. Inspired by Alvin Toffler’s The Third Wave and Steve Case’s The Third Wave, I propose to collectively refer to these businesses as Third Wave Companies.
The way I see it, The Third Wave is not trying to define a certain framework of entrepreneurship, or to confine entrepreneurs with how businesses should be conducted. Rather it points to a crossroad of history when there needs to be a radical change of mindset, in a relatively short period of time, to change the way we conduct business and to change the way we behave as consumers. With what is going on at the backdrop, the Covid-19 pandemic, the steeper gap between the ultra-rich and the rest of us, the rise of China and the reemerging of nationalism, a radical change is inevitable and is indeed badly needed.
Therefore when we tell the purpose story of a company, we referred to diverse ideas — conscious capitalism, natural capitalism, patient capitalism, triple bottom line, shared-value capitalism, B Corporations, impact investing, social enterprise, social responsibility, Rise from the Rest, etc. Depending on the scale and context of your business, we pick the most fitting model or mix of models to tell the story.
Purpose Narrative Development
The narrative that directs to both the customers’ and investors’ hearts. Strategic narratives meant not only to increase growth and profit, but also with purpose strategically developed to win over investors who put relevant and meaningfulness over the blind chase of margin.
Capture Stakeholders’ Attention
Investments are booming — but they are increasingly spread over more risk-financed companies. Venture capital spending hits all-time high in 2018, eclipsing dotcom bubble record. Venture capital investors deployed nearly $131 billion across 8,949 deals in 2018, according to new data from PitchBook and the National Venture Capital Association. Competition is stiffening, however. In the same year, there were 30.2 million small businesses operating in the U.S. alone. Venture capital as a source of finance has therefore declined dramatically for individual founders. Even though the market is booming, investors have greater choice and have been looking at more than just financial performance.
Without a sense of purpose, no company, either public or private, can achieve its full potential.Laurence D. Fink — Founder, Chairman and Chief Executive Officer of BlackRock, Inc.
Communicate Meaning and Purpose
Investors want growth. In a world in which high economic growth rates are confronted with rising social concerns, an increasing number of sponsors are looking for commitments that achieve a higher goal. Never was the public perception of companies bigger and more extensive than now. A startup not only has to promise rapid returns to stand out among the many new business ideas — it also has to respond in the long term to people’s everyday realities and dreams in order to be able to tell a growth story for many years to come.
This is why today, already in the first round of discussions, you need to be ready to discuss questions such as:
- What role does your company play in society?
- What relevance do you have for the technological and systemic themes of the future?
Any company looking for capital needs sound purpose strategies in order to offer appraisers a ‘why’. After all, a company without deeper meaning will never reach its full potential.
Teamwork is required for a responsible capitalism to happen. The collaborative effort is best described by Moore’s Law and Metcalfe’s Network Effect. Business leaders like Steve Case (former CEO of AOL), Howard Schultz (Starbucks), John Mackey (Whole Foods Market) and Sara Blakely (Spanx) have demonstrated that profit with purpose works. Their successful precedence inspired like-minded entrepreneurs to take action, to come up with an idea and passionately follow it through. Our role as communicator, is to tell their purpose story and scale up the message distribution so more resources, such as capital, partnership, channels, customers, etc. will be inspired, convinced and taking action. We humbly hope that through this small contribution of purpose storytelling, together we can move the market, move the ecosystem, and bring humanity one step closer to a better future.